The Conduct of Employment Agencies and Employment Businesses Regulations 2003, became law in 2004. Full details of The Employment Agency Act can be found at www.opsi.gov.uk.

Why should a limited company contractor consider opting out of the Regulations?

Some limited company contractors are taking the view that operating under the Agency Regulations may place them at a disadvantage in securing a contract assignment with a particular client. In particular, the additional procedural requirements imposed upon the employment business and the client may delay the evaluation of that limited company contractor relative to a contractor who has opted-out of the Agency Regulations.

In addition, some clients appear to be concerned about the employment risk of limited company contractors seeking to opt in to the Agency Regulations, and becoming treated in law as permanent staff. There have been a number of recent court cases where contractors attempted to claim redundancy payments for example. Consequently, some clients, fearing that a limited company contractor could be considered more akin to a temporary employee rather than an independent contractor, may select only those contractors who have opted out of the Agency Regulations.

The Recruitment and Employment Confederation (REC) provide information for limited company contractors regarding opting out of the regulations. The Professional Contractors Group, www.pcg.org.uk, have suggested that those limited company contractors seeking to offer their services could be more likely to be assessed within IR35 if the limited company contractor is subject to the Agency Regulations.

This is because some view the Agency Regulations as principally applying to protect the supply of individual workers who are similar to temporary employees, which would undermine any arguments of a limited company contractor seeking to challenge IR35.

What is max20’s view on remaining opted-in or opting out of the Agency Regulations?

max20 offer all limited company contractors the choice of remaining opted-in or opting out of the Regulations.

How should a limited company contractor opt out of the Agency Regulations?

Limited company contractors who wish to exercise their right to opt out of the Agency Regulations must notify max20 in writing prior to their contract assignment commencing. Alternatively, you may use the form supplied by our consultant or by downloading the opt out form.